Gold prices remained stable on Wednesday, with market participants closely watching developments in peace talks between the US and Russia regarding the ongoing Russia-Ukraine conflict. The discussions, which were initiated under former US President Donald Trump’s administration, aim to explore a potential resolution to the war in Ukraine.
As of 0831 GMT, spot gold was priced at $2,938.13 per ounce, just $4 shy of its all-time high of $2,942.70 reached last week. Meanwhile, US gold futures rose by 0.2%, trading at $2,956.20.
Gold’s Price Outlook Amid Peace Talks and Geopolitical Uncertainty
“Gold’s upside potential remains somewhat capped, especially after the first round of US-Russia peace talks ended without any clear breakthrough,” said Ajay Kedia, director at Kedia Commodities in Mumbai. He added, “If a concrete peace plan emerges, it could likely dampen demand for gold, as the ‘war premium’ would start to erode.” Kedia noted that technical profit-taking could be expected, with resistance seen around $2,970 and support at $2,890.
Despite this, gold continues to be viewed as a safe haven investment in times of geopolitical uncertainty and inflation concerns. The ongoing conflict in Ukraine and the uncertainty surrounding global political dynamics are likely to keep gold in demand as a hedge against economic instability.
The Role of Geopolitical Risks in Gold’s Performance
Gold is traditionally seen as a hedge against inflation and market volatility, and the current geopolitical risks surrounding Russia and Ukraine only add to its appeal. Investors are also awaiting the release of the Federal Reserve’s January meeting minutes, scheduled later today, for insights into the central bank’s potential interest rate decisions for the year.
Trump’s policies, including his recent comments about imposing auto tariffs of around 25%, have added to market uncertainty. The former president also mentioned considering similar duties on semiconductors and pharmaceutical imports. These potential trade barriers could create macroeconomic volatility, further driving investors to seek refuge in assets like gold.
Analysts at ANZ stated that the macroeconomic and geopolitical uncertainties generated by Trump’s administration might prompt further diversification into gold, as investors look for safer assets amid increasing market instability.
Precious Metals Performance: Silver, Platinum, and Palladium
In addition to gold, silver showed a slight gain, rising by 0.3% to $32.98 per ounce. Meanwhile, platinum dropped by 0.8%, trading at $979.75, and palladium saw a decrease of 0.7%, standing at $980.
UBS analyst Giovanni Staunovo noted that tariffs on cars could significantly weigh on sentiment for white metals such as platinum and palladium, further influencing precious metal markets.
